Equal measures in the world of financial services
Francesca Hampton, chief financial officer, at Cynergy Bank, talks to Chris Evans about handling crises, Game of Thrones cyber strategies and closing the gender gap
Indeed, going back to her early career, she talks about working at asset finance company Lombard, getting involved in corporate structures and asset classes when there was a massive consolidation of the business.
“I was working with a consultancy company and they said to me ‘why aren’t you the finance director (FD), you know everything about this place?’ I didn’t see myself as that, I was a change manager. But it got me thinking. Then when the FD left, I went for it. The decision was a big turning point. It taught me as a female not to wait for someone else to tell me what I should be doing.”
Ever since, she’s made it clear to others what she wants and needs. After having her first child, instead of drifting back in to the same role, she created a new one in the invoice finance business. “You have to know what’s going to work for you and say it up front,” she insists. “I’ve yet to find a woman who, when she asks, isn’t accommodated.”
This go-getting attitude saw her rise fast through RBS. Soon she was applying for her first executive role, a CFO position in the global transaction services division.
Fortunately she had a supportive boss who respected strong women. So much so that she was offered the job even though they knew she was going on maternity leave with her second child and they had two other male candidates ready to go. Another key turning point.
Under attack
She was determined to prove her strength and worth as CFO. But then the RBS IT crisis of 2012 hit, which threw things into turmoil. Customers’ wages, payments and other transactions were disrupted. Some were unable to withdraw cash or see bank account details, while others were sent fines for late payment of bills because the system could not process direct debits.
“It was a huge deal,” Hampton admits. “But it was a good learning experience. The crisis calls we were having three or four times a day illustrated who was committed, could articulate an issue and problem solve, and who was in the wrong place. It focused minds and people, and actually helped create bonds as well.”
Tackling cyber and data attacks is now a common occurrence for most banks and is being taken seriously. “At Cynergy Bank, the board and executives have played Game of Thrones scenarios where we (hypothetically) attack each other, so we know how we’d each react in a real situation. You need to be tough and resilient,” she insists.
Despite Hampton’s friendly demeanour and easy manner, you can tell she is determined and enjoys speaking her mind. Some male colleagues haven’t always responded well to this. But in her current role at Cynergy Bank, she says the guys “know how I think and we laugh about it, embrace it, and spend time to understand each other”.
She feels this collaborative approach between men and women in the workplace is key to tackling the gender divide and hopefully the pay gap, too. More women in senior positions will also help redress the imbalance.
Collaborate and listen
Collaboration at the top regarding conduct, compliance, transparency and protection is also key. For example, Hampton believes the Senior Managers and Certification Regime (SMCR) has encouraged executives to evidence their conduct and decision making better.
“At Co-op, we sat down and went through our meeting processes to establish if we were making important decisions and delegating properly. And now at Cynergy Bank, we do the same in every meeting, identifying who the senior manager is and what they have to say because they’re the ones accountable.”
Equally, she highlights the importance of creating the right whistleblowing cultures. “No one wants to whistleblow, but it’s good that people feel they can do it and aren’t going to be sacked,” says Hampton. “We also publish our channels of communication to staff, explaining that they’re anonymous and protected. Then, as long as the investigations are done properly, hopefully rights can be wronged and customer trust will slowly return.”
Customer satisfaction
Interestingly, pleasing the customer is another key area for Hampton. During her days at the challenger banks and fintechs, everything revolved around the customer’s needs.
“From top to bottom, it’s about incentivising staff to do the right thing for the customer,” she insists. “The problem at the big banks is there’s a lot of bureaucracy, so you’ll find people processing tasks because that’s what they’ve always done, or because it’s divisionalised or siloed. They can be a lot more internally focused.”
She believes the increase of digitisation and automation means there’s a lot more access to data on customers, which needs to be analysed and acted on at all banks. “There’s been a switch from appeasing their own needs to those of the customers, especially the vulnerable ones. Many of the fintechs and challengers are niching off into smaller markets, and targeting particular customers.
“Meanwhile, the big banks that used to do everything are trying to compete with the fintechs, but soon realising that, if they can’t beat them, they can buy them up, or set up their own smaller fintech offshoots to compete.”
This is no bad thing, she believes. “It’s a huge market with enough space for all. Indeed, they could learn from each other to improve and share services for the benefit of the customer.”
But Hampton insists there is an optimum size of a bank to make sure you can provide a great service to the customers, withstand economic cycles, and bear enough of the costs base to make sure you’re doing a strong job on risk compliance and conduct. “This is quite hard for some fintechs to understand as they grow – suddenly they’re needing extra layers of costs. And, as we’re going into a potentially disruptive and volatile cycle, they need to be at a size that withstands it all, especially with the new IFRS 9 requirements,” she says.
Handling IFRS 9
IFRS 9 has “changed the face of banking,” insists Hampton. “Fortunately, at Cynergy Bank we have a low default rate and a great credit quality book, and our transition with IFRS 9 was quite well thought through and not too painful.”
Indeed, Hampton says she thinks it has actually been the auditing firms that have had to adapt the most. “Previously, they didn’t have to delve so deep under the skin of our banking models, but now they are having to learn a lot and fast. It will require a couple more years to get to grips with the new rules.”
She concedes that the process hasn’t been completely smooth. The standard has taken a while to evolve and proven laborious and expensive to manage. “You’re better off as a fast follower in some respects, especially for the smaller players with less resources,” Hampton adds.
She’s also concerned that there’s not enough competition in the advisory and accounting firms to service all the banks. “The big firms send all their best people to the big banks, but we need the same advice on a smaller scale.”
Tech essentials
The overload of regulation and data management means companies need to be smart with their compliance. There’s plenty of technology out there, but is it good enough to support banks’ needs?
“We have to do a lot of processing behind the scenes to take data out of our systems, update it, create processes and send it to the regulators. Most tech companies provide a sort of consultancy service, giving you a piece of kit then offering bespoking around it, which is OK. But there needs to be a system where the regulators can take live data from financial services instantly.
“There’s a company called Suade Labs, which we use, that is on the way to offering that service. But the banks have got to feel 100% comfortable and confident in their data to give regulators the keys to extract it at any time.”
Part of it is getting the data right at source and that’s where the fintechs are helping. “You used to have to rely on change and IT teams, but with new kits on the market, you can put new products out in hours where it used to take weeks.
“The whole banking market is going through a massive evolution at the moment, including on the gender front, we (banks) just need to keep up with the pace of change,” Hampton concludes.